[Note: The PECL uses its own term "avoidance" but in a different context. In its Chapter 4 dealing with validity the PECL has a provision on "partial avoidance". PECL Article 4:116. It states "If a ground of avoidance [for validity reasons] affects only particular terms of a contract, the effect of [such] an avoidance is limited to those terms unless, giving due consideration to all the circumstances of the case, it is unreasonable to uphold the remaining contract."]

A further crucial distinction within the subject matter of the two articles is the type of contract
considered by each. Article 51 applies where there has been a failure to deliver part of a contract
intended to be delivered as a whole. Article 73 applies to [page 281] * instalment contracts and the
failure to perform an obligation in respect to an instalment.[2]
Further, while in both scenarios the
buyer may ultimately obtain the same remedy, the two articles follow different paths to that result.[3]

The PECL does not draw a distinction between rights of the seller and buyer in the same manner as
the CISG. Nor is the PECL intended to relate solely to contracts for the sale of goods. As a
consequence of the latter difference the term "delivery" makes way for "performance". At first
glance, PECL Article 9:302 is most comparable to CISG Article 73 as it considers a failure of
performance in the situation where "… the contract is to be performed in separate parts and in relation
to a part to which counter performance can be apportioned …" However, as shall be discussed, this
language does not exclude those circumstances contemplated by CISG Article 51. Further, despite
wording which may initially indicate the contrary, and arguably unlike CISG Article 73(3),[4] PECL
Article 9:302 does not release an aggrieved party of any obligations that may have accrued at the time
of the failure.

By providing recourse to the Nachfrist provisions in CISG Articles 47 and 49(1)(b),[6] there are
circumstances in which the buyer does not need to show the fundamental breach required by CISG
Article 73.[7] CISG Article 51(2) also offers the buyer the ability to avoid the entire contract in
instances where failure as to a part amounts to a fundamental breach of the whole contract.[8]
CISG
Article 73(3) would instead appear to take the curious position of forcing the buyer to elect between
avoiding future or previous deliveries, although this distinction has been dismissed.[9][page 283]

As is the case with all of buyer's remedies under the CISG, Articles 51 and 73 are both subject to the
examination and notice regimes of Articles 38 and 39 (examination of the goods "within as short a
period as is practicable under the circumstances" and "notice to the seller specifying the nature of
[any] lack of conformity within a reasonable time after [the buyer] has discovered it or ought to have
discovered it"). If buyer elects the remedy of avoidance where the goods have been delivered, Article
49(2) also requires the buyer to declare the contract avoided "within a reasonable time." Article 51
states that "articles 46 to 50 apply" to it; hence this further reasonable-time requirement is an element
of an avoidance proceeding pursuant to Article 51. There is no reference to that in Article 73(1).[10]
Even so, the general consensus of scholarly opinion tends to favor the buyer applying the CISG
Article 51 approach in the absence of a very clearly defined instalment contract.[11]

The drafters of the PECL have avoided the competition between CISG Articles 51 and 73 by not including a specific provision that explicitly directs the parties to act in the same manner as CISG Article 51. Although using the same language of CISG Article 51, i.e., "parts", a plain reading of PECL Article 9:302 does only allow termination [12] as to the part where there has been fundamental non-performance.[13] Therefore, with the exclusion of this linguistic argument, PECL Article 9:302 does represent a shorter restatement of CISG Article 73. [page 284] However, it is important not to immediately assume that the PECL promotes the rights and remedies afforded by CISG Article 73 and by its silence condemns the approach of CISG Article 51.

Therefore, when considering PECL Articles 9:302, 9:305 and 9:306 together and in context, it is
possible to see that the same philosophy that drives CISG Article 51 emerges. Recourse is first given
to what might be described as "non-drastic" remedies. If the failure to perform a part of the contract
amounts to fundamental non-performance of the entire contract, then with the assistance of PECL
Article 9:306, all obligations including those previously accrued can be avoided.

See also, Germany 3 July 1992, Landgericht [District Court] Heidelberg [translation available on-line at
<http://cisgw3.law.pace.edu/cases/920703g1.html>]. In that case, a German buyer concluded a contract for the sale
of computer components with a U.S. seller, but after delivery of 5 parts had been carried out, the buyer refused payment
and declared the contract avoided on the grounds that the delivery of 11 parts had been agreed. The German court held
that even if delivery of 11 parts had been agreed the dispatch of only 5 parts would not entitle the buyer to declare the
contract in its entirety avoided according to CISG Art. 51(2). See further, R. Koch, "The Concept of Fundamental
Breach of Contract Under the U.N. Convention on Contracts for the International Sale of Goods", Review of the
Convention on Contracts for the International Sale of Goods (CISG) 1998, Kluwer Law International (1999) 177-354
[also available on-line at <http://cisgw3.law.pace.edu/cisg/biblio/koch.html>].

See also, ICC Arbitration Case No. 7660 of 1994 [available at: <http://cisgw3.law.pace.edu/cases/947660i1.html>],
where the arbitral tribunal noted that article 51(1) CISG provided for a partial avoidance of the contract as declared
by the buyer, and that under article 51(2) CISG such partial avoidance was the rule rather than the exception in cases
of partial non-performance amounting to a non-fundamental breach of the contract (article 49(1)(a) CISG). In that case,
the arbitral tribunal determined that a partial avoidance under article 51(1) CISG was permissible where the defective
piece of machinery formed an independent part of the contracted goods as it was in the case at issue. However, the
arbitral tribunal further determined that the buyer's partial avoidance was barred by the 18-month time limit contained
in the contract.

See, e.g., Switzerland 30 November 1998, [Commercial Court] Zürich [CLOUT abstract no. 251, also available at:
<http://cisgw3.law.pace.edu/cases/981130s1.html>], where that court stated that regarding avoidance in installment
contracts under CISG Art. 73, installment deliveries do not have to be of the same type of goods.

Cf. Ziegel who, commenting on the operation of CISG Art. 51, points out: "Read literally, art. 51(1) suggest that the
non-conforming goods may be subject to the remedy of avoidance regardless of the commercial viability of the rejected
goods. UCC 2-601, by way of contrast, provides that only a 'commercial unit' may be accepted or rejected by the buyer.
Presumably the Convention did not intend a different result." Jacob S. Ziegel, Report to the Uniform Law Conference
of Canada on Convention on Contracts for the International Sale of Goods, (July 1981) [available on-line at
<http://cisgw3.law.pace.edu/cisg/text/ziegel51.html>].

Comment and notes on PECL 9:302 and 9:301, 9:306

Like the commentary to the UNIDROIT Principles and the U.S. Restatements, the comments to
the PECL help explain the text. The PECL notes identify civil law and common law antecedents
and related domestic provisions. With the permission of the Commission on European Contract
Law, these comments and notes are presented below. The source of this material is Ole Lando &
Hugh Beale eds., Principles of European Contract Law: Parts I and II, Kluwer Law International
(2000) 411-413, 409-411, 421.

If the contract is to be performed in separate parts and in relation to a part to which a counter-performance can be apportioned, there is a fundamental non-performance, the aggrieved party may
exercise its right to terminate under this Section in relation to the part concerned. It may terminate
the contract as a whole only if the non-performance is fundamental to the contract as a whole.

Comment

A. General principle

Where the contract calls for a series of performances by one party, each with a matching counter-performance (typically, a separate price for each performance), the contract may be seen as divisible
into a series of units. If one party fails to perform one unit, the other may want to put an end to its
obligation to accept performance of that unit: for instance, in a contract for services it may want to
arrange for someone else to do the work. However, it may not be appropriate for the aggrieved party
to have the right to terminate the whole contract because the failure may not be fundamental in
relation to the whole. The unit not performed may not affect the rest of the [page 411] contract
significantly, and the non-performance may not be likely to be repeated. In these circumstances, it is
appropriate to allow the aggrieved party to terminate in relation to the part not performed, leaving
the rest of the contract untouched. Only if the non-performance is fundamental to the whole contract
should the aggrieved party be entitled to terminate the whole.

Illustration 1: An office cleaning company agrees to clean a law firm's office on Saturday of
each week for fifty weeks at a price of £500 per week. One Saturday the cleaning company's
employees hold a one day strike. The law firm may terminate in relation to that part of the
contract and bring in another cleaning firm to clean the office for that week. They may not
terminate the contract as a whole unless it is clear that that the strike will be repeated and that
therefore there will be a fundamental non-performance, so that there is an anticipatory non-performance within Article 9:304.

Illustration 2: The contract is as in Illustration 1. The cleaning work done in the first week is
completely inadequate. It is clear that the cleaning company is trying to do the work using too
few employees to cover an office of that size. The cleaning company refuses to use more
employees. The law firm may terminate the whole contract.

See also the comment to Article 9:306, Illustrations 1 and 2.

B. Terminology

"Termination in relation to a part" of the contract is a slightly awkward phrase, as the contract is not
terminated, but it has the advantage that the general rules on termination (such as the need to give
notice under Article 9:303) applies. CISG Article 73 takes the same approach.

Termination "of the contract as a whole" normally means only termination of all the future obligations
on each side. See Article 9:305.

C. Performances which are divisible though not to be paid for separately

Sometimes one party's obligation to perform consists of distinct parts, and the non-performance
affects only one of those parts, but the payment to be made for them is not split up into equivalent
sums. If nonetheless the first party's performance is really divisible and the payment can be properly
apportioned, Article 9:302 applies and termination is allowed in respect of the part affected.

Illustration 3: [A]s [in] Illustration 1 but the price is £25,000 for the fifty week period. This
price was initially calculated by the cleaning company simply by multiplying the weekly charge
by 50. The aggrieved party may again terminate in respect of the week missed. [page 412]

Notes [Match-ups with Continental and Common Law domestic rules, doctrine and
jurisprudence]

Where a contract is to be performed in instalments or separate parts, most systems recognise that
the aggrieved party should have the right to refuse to accept, and to refuse to render its promised
counter-performance for the defective instalment or part, without necessarily having the right to
refuse to accept further performance of the remaining performance under the contract; but it may
be entitled to refuse to accept any further performance when the non-performance affects the
whole contract. This is provided, for instance by DANISH Sale of Goods Act §§ 22, 29 and 46;
FINNISH and SWEDISH Sale of Goods Act, § 43, 44 (see Ramberg, Köplagen 462); IRISH
Sale of Goods Act 1893, s. 31(2); UK Sale of Goods Act 1979, s. 31(2) (and in the case law
similar results are reached for other contracts; see Treitel, Remedies § 278); GREEK CC art. 386
(under which the aggrieved party may choose between damages and termination even with respect
to parts already performed: Michaelides-Nouaros Erm. AK vol. II/1 art. 386 nos.7-14).
GERMAN law does not recognise a single principle but reaches similar results. Thus in the case
of a contract for delivery in instalments (Sukzessivlieferungsvertrag or Ratenlieferungsvertrag)
the aggrieved party can terminate the contract with respect to the improper instalment or with
respect to all future instalments. In the latter case it is often required that the aggrieved party's
interest in the performance has fallen away (cf. Palandt (-Heinrichs) Intro. to § 305, nos. 31-33,
distinguishing the different kinds of non-performance). Virtually the same rule applies in
AUSTRIAN law, see ABGB §§ 918(2) and § 920 second sent. Similar results are reached in
BELGIUM, see Lefebve Rev. de Notariat Belge (1988) 266 ff.; Fontaine R.C.J.B. 1990, 382 ff.;
M.E.Storme T.B.B.R/R.G.D.C 1991, 112, no. 12 ff.; Cass. 29 May 1980, Arr.Cass. no. 310,
R.W. 1980-81, 1196; and in FRANCE, where according to its pouvoir souverain, the court may
partially terminate the contract for a partial non-performance (Malaurie et Aynès nos. 742-744); it
will take into account the divisibility of the performance. In SPANISH law termination is not
necessarily retrospective (Diez-Picazo, II 724; contra; Albaladejo, II, 1 § 20.4.5. ITALIAN CC
art. 1564 provides that in contracts for the periodical supply of goods the whole contract may be
terminated if the non-performance is of major importance and leads to loss of confidence in future
performance, but according to CC art. 1458(1) termination does not extend to performances
already executed; on the question of partial termination see Corrado 363 ff. PORTUGUESE CC
art. 434(2) provides for termination of the whole of a contract for performance by instalments or
over a period of time when the ground for termination relates to the unperformed instalments.
DUTCH BW art 6:265 allows the creditor in all cases to choose between termination in part or of
the whole, but subject to the general principle that the failure must justify the type of termination
chosen.

ULIS arts. 45 and 75 and CISG art. 73 are similar to Article 9:302. [page 413]